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b. Profit
The following colloquy at trial sheds some light on how
Colgate's management arrived at the conclusion that the section
453 investment strategy promised a reasonable return and
realistic prospect for profit. Pohlschroeder was the witness.
Q: In determining whether you should cast a vote
or recommend that the partnership purchased
(sic) the Citicorp Notes, did you take into
account the transaction cost that would be
incurred upon the sale of those notes?
A: It was known that there were transaction
costs.
* * * * * * * *
I really didn't know at that time what that
exact amount was going to be, and basically,
the initial part was just to get a reasonable
return on the Citicorp Notes and make sure
that the cash that we had received as a
contribution was invested as quickly as
possible.
Q: So, in determining whether you were going to
earn a reasonable return, did you take into
account the transaction costs that might be
incurred upon the sale?
A: Not at that point. It was just basically an
investment decision.
Q: So you did not compare those transaction
costs that might have to be incurred upon the
sale of the Citicorp note to the transaction
cost on other instruments?
A: That is right, yes.
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